GAITHERSBURG – Grants, loans and rewards to local businesses for creating jobs were some of the topics that came up during a Gaithersburg City Council work session Sept. 23.
Representatives from state and county governments joined Assistant City Manager Tom Lonergan in presenting about economic development incentives available to local businesses. They spoke after councilmembers requested information about rewards they could offer businesses, such as tax credits and drivers of economic development. The three levels of government share the goals of economic development and attracting and holding businesses.
“When significant opportunities to bring new jobs and investment into Gaithersburg are before us, it’s frankly uncommon for us to be working alone,” Lonergan said. “State, county and municipal governments work together when negotiating meaningful business attraction and retention projects.”
Andy Fish, of the state commerce department, said that in working with prospective state, county or municipal businesses, state employees begin by “qualifying” the business: finding out its characteristics, such as the size, how many employees it has and what the company management’s goals are. Characteristics such as the size of the company affect which “tool in the toolbox” the state may offer it.
The state is not the only level of government involved in the initial assessment, however.
“We go through that (initial) evaluation in conjunction with the local officials because we want to make sure that there’s total alignment behind the project, that it’s attractive and deemed worthy by people locally as well as with the county and with the state,” Fish said.
Fish said businesses might be put in contact with the state commerce department through one of several different channels. One such channel is county developers.
One way state commerce helps is by telling businesses about their eligibility for services, which saves time that company staff would have spent applying for a service the companies are not able to receive anyway, said Fish. Income tax credits are available in some municipalities and other jurisdictions, but not in all, within the state.
Laurie M. Boyer, economic development manager of the county department of finance, said that Montgomery County also offers various grants, related to various aspects such as its industry, as well as to the achievements of a company.
Grants for performance require that the company keep its part of the bargain. If the company receives a grant after it commits to something such as creating several new jobs, but then its net increase in jobs falls short of the target, the amount by which it did not meet the benchmark will convert from a grant to a loan.
The county offers two options for financial or technical assistance. for which companies whose business is affected by development projects can apply. Small businesses affected by re-development funded by the county, on county-owned land or by county-owned facilities, in designated geographical areas including Silver Spring, Bethesda and Clarksburg, may apply for assistance through the Impact Assistance Fund (IAF). They may receive up to $25,000. Companies negatively affected by re-development funded by the county or on county-owned land, specifically in the Wheaton Development Project, may apply to the Small Business Assistance Program (SBAP) and may receive up to $125,000.
Also, the county recently began offering, through contractors, loans of between $500 and $15,000 to small businesses.
“It has been extremely successful, and the average size of the loan (…) (is) about $5,500,” Boyer said.
The presenters also answered councilmembers’ questions. When asked about the demographics of the people who used the microloan service, Boyer said the county currently does not analyze the information about people who use the service because the program is less than two years old.
The county does keep a record of the industries in which people who take out the loans work, however. Councilmember Laurie-Anne Sayles asked how the grant for job creation worked. Fish said a company must write a letter of interest to the state, and then meet a threshold number of new jobs, depending on the size of the company. The company must then fill the positions and keep them filled for at least three years. Not meeting the targets would result in a partial claw-back, in which the company would need to pay some of the money back to the state.